Tuesday, 01 Feb 2011
According to an official who was involved in working out the blueprint for the nation steel industry, which is set to be finalized soon said China top 10 steel mills will be able to contribute 60% of the country total steel output and 40% of the nation steel production will come from coastal areas in the 12th Five-Year Plan (2011-2015) period.
An official from China steel lobby, China Iron &Steel Association who wished to remain anonymous said a draft of that plan highlighted the priorities of increasing the concentration of the scattered steel industry, upgrading the industry technology, eliminating outdated capacity and encouraging steel companies to move to coastal bases.
For several years, the nation has been encouraging big mills to merge with rivals to create more cohesive steel groups in an effort to address overcapacity, pollution and a disadvantageous position in price negotiations for iron ore.
Mr Hu Kai an analyst from Umetals.com said Chinese steel companies have to pay an extra USD 200 million this January for iron ore imported from BHP since it made that shift.
The central government aims to create several steel giants with an annual production capacity of over 50 million tons through mergers and acquisitions to reverse the situation.
Hebei Iron and Steel Group Co Ltd said in January that it agreed to take 10% stakes in seven private steel mills to expand its production capacity and increase consolidation in Hebei province. Hebei province where 60% of the capacity comes from small private steel mills is drafting a plan to reduce the number of its steel mills from 88 to 10 during the next five years.
The official from CISA said that because of increasing environmental pressure and the need to control logistical costs, the central government plans to gradually move its steel production to coastal areas. The official said the government will accelerate the restructuring of the steel industry that is focused on China coast with Anshan Steel in Liaoning province, Shougang in Caofeidian, Hebei province; Baosteel in Zhanjiang, Guangdong province and Wuhan Iron and Steel Group in Fangchenggang in the Guangxi Zhuang autonomous region.
The official also said the 12th Five-Year Plan will highlight the preparation of new coastal bases in Fujian and Jiangsu provinces. Another target of the plan is to increase the proportion of Chinese steelmakers self-supplying of iron ore by expanding domestic ore production and acquiring more overseas resources.
Mr Deng Qilin chairman of China third largest steelmaker, Wuhan Steel said his company will become self-sufficient in iron ore supplies in the next five years.
China domestic iron ore supplies have been rising for the last two years. During the first nine months of 2010, domestic iron ore output jumped 26%YoY to 780 million tonnes. (sourced:China Daily)
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